Most states that legalize cannabis hand the entire supply chain to private business. Colorado, Michigan, and dozens of others license growers, processors, and dispensaries separately, but all of them stay in private hands. North Carolina appears to be thinking about something else entirely.

Instead of asking whether to legalize cannabis, the state’s advisory council is asking a narrower and arguably more significant question: who gets to sell it. According to a draft document presented to the council’s Market and Regulatory Subcommittee, cultivation and manufacturing could stay private. Retail would not.

That matters more than it might seem. Retail is where cannabis companies build brand loyalty, collect consumer data, and capture the fattest margins in the supply chain. If North Carolina moves forward with a state-controlled retail model, the businesses growing and processing cannabis in the state would be selling into a government-run system rather than opening their own storefronts.

The document driving this conversation is explicitly marked “FOR DISCUSSION ONLY,” and nothing here reflects a final legislative decision. But the framework being floated is detailed enough to signal where North Carolina’s cannabis debate is heading, and it’s worth understanding now, before any bill reaches the General Assembly floor.

What Is North Carolina’s Market and Regulatory Subcommittee Proposing?

The North Carolina Advisory Council on Cannabis, created by Governor Josh Stein in June 2025, tasked its Market and Regulatory Subcommittee with figuring out how a legal cannabis industry should be structured. On September 18, 2026, that subcommittee reviewed a document titled “Cannabis Licensing Draft Recommendations,” and NCDHHS confirms the meeting included a presentation on a state-control license model.

The proposal describes a hybrid approach that borrows from two existing systems: North Carolina’s own alcohol control structure and Québec’s government-run cannabis retailer, the SQDC. Under this model, the state would exclusively control the retail channel while private, licensed businesses handle cultivation, manufacturing, and potentially wholesale distribution.

It’s worth repeating that the document is stamped “FOR DISCUSSION ONLY.” This is a working draft meant to guide subcommittee conversation, not a bill or a finalized recommendation. The council’s larger mandate, laid out when Stein formed the group, is to recommend a comprehensive cannabis policy that addresses public health, public safety, agricultural interests, and past cannabis convictions, with a final report due to the legislature by December 31st.

Still, the fact that a government-run retail model made it onto the table at all sets North Carolina apart from nearly every other state currently regulating cannabis, and it’s the clearest signal yet of the direction some officials want the state to take.

How Would North Carolina’s Three-Tier Cannabis System Actually Work?

The draft splits the cannabis market into three tiers, echoing the structure North Carolina already uses to regulate alcohol.

Tier one covers cultivation and manufacturing. Private, licensed businesses would grow, process, package, and label cannabis products. The draft proposes multiple license types here rather than a single blanket license: a craft farm license for small-scale North Carolina growers, a standard cultivation license for larger commercial operations, and a manufacturing or processing license for companies buying raw cannabis from cultivators.

Tier two covers wholesale distribution, and this is where the draft leaves the most room open. Three options are on the table. One would let licensed private wholesalers compete for contracts to supply the state retail system. Another would have the state operate a central cannabis warehouse similar to the one the NC ABC Commission already runs for liquor. A third combines both, allowing regulated private wholesale alongside an optional state warehouse.

Tier three covers retail, where the draft takes its most direct stance: the state would sell cannabis exclusively through state-controlled stores. The draft proposes two models. In the first, a single state cannabis retail corporation would run its own stores, similar to Québec’s SQDC. In the second, a state cannabis commission would partner with local cannabis boards and stores, mirroring how North Carolina’s ABC system already operates through 171 local boards.

The document also flags several guardrails under consideration, including protections against vertical integration, statewide product approval requirements, and using retail pricing as a tool to compete with the illicit market rather than fixing prices outright.

Why Does North Carolina’s Existing ABC System Matter Here?

North Carolina is one of 17 states that directly controls liquor sales and distribution, and its ABC system is doing a lot of heavy lifting in this cannabis conversation. The state’s 171 local ABC boards operate 452 stores, and the system generated $713 million in public revenue in fiscal year 2024 and $696 million in fiscal year 2025, money that funds the General Fund, local governments, law enforcement, and substance treatment programs, according to the State Auditor’s office (WRAL).

Governor Stein has pointed to this system directly as a template. “Let’s have a system actually not very dissimilar from the ABC system,” he told WRAL in June 2025. “We have controlled sales and people know what they’re buying.”

ABC assistant general counsel Renee Metz presented to the council’s subcommittee and was candid about what expanding the commission’s role would require. She noted that the commission currently operates with only three members, which limits its capacity. She added that organizing additional commissioners into smaller working groups would help the agency manage cannabis license applications alongside its existing liquor duties.

North Carolinians spent roughly $3 billion on illegal cannabis in 2022, according to the council’s own interim report. Meanwhile, states with regulated adult-use markets generated between $33 million and $552 million annually in cannabis tax revenue. That gap is part of what’s driving the urgency behind this planning, even before any legislation exists.

What Can Québec’s Cannabis Model Teach North Carolina?

Québec is the closest real-world comparison for what North Carolina’s subcommittee is discussing, and the results offer both encouragement and caution.

Since 2018, Québec has sold legal cannabis exclusively through the SQDC, a state-owned monopoly required to funnel most of its profits into a cannabis prevention and research fund. The SQDC now runs nearly 100 retail locations and offers same-day or 90-minute delivery in a growing number of regions. Québec also set the minimum purchase age at 21, higher than most of Canada, and it bans cannabis edibles shaped like candy, desserts, or chocolate.

The SQDC estimates it has captured 56 percent of Québec’s illegal cannabis market, though researchers note that figure is a rough estimate since the true size of the illicit market is still hard to measure. Quality control has been a genuine strength of the model. Because the SQDC avoided a purely commercial, sales-driven approach, consumers still get consistent access to tested, reliable products through an efficient distribution network.

The concerns raised by Québec’s own cannabis oversight committee are worth noting too. Youth vaping rates climbed sharply despite the SQDC’s legal monopoly on retail sales, demonstrating that unregulated products can still flow into a market through other channels. Social media advertising has also proven difficult for regulators to control, even under a government-run retail structure.

For North Carolina, the lesson is nuanced. A state-controlled retail channel can build consumer trust and consistent quality, but it doesn’t automatically solve every public health or illicit market challenge on its own.

How Would State-Controlled Retail Change the Game for Brands and Growers?

This is where the North Carolina proposal gets complicated for anyone hoping to build a cannabis business in the state.

In a conventional legal market, a cultivator or product brand can open its own dispensary, take control of how it merchandises its products, build a loyal customer base, and capture retail margins directly. Under North Carolina’s draft framework, that path may not exist. Tier 1 license holders would grow and manufacture, but Tier 3, the retail layer, would belong to the state.

That reshapes several things at once:

• Shelf space becomes a negotiation with the state, not a business decision a brand controls on its own, since a state cannabis retail corporation or commission would decide what gets stocked and where.
  
• Direct-to-consumer relationships get harder to build, because the entity selling the product to the public isn’t the company that grew or made it.
  
• Wholesale margins depend on which Tier 2 model gets chosen. A private wholesale tier would let distributors compete for supply contracts, while a state warehouse option would centralize that function entirely, and a hybrid could split the difference.
  
• The craft farm license offers a narrower but real opportunity for small North Carolina growers to participate without competing directly against large commercial cultivation operations.

For established multistate cannabis brands accustomed to owning their retail presence, this model would mean rethinking how they enter North Carolina altogether. For smaller growers, particularly those eligible for the craft farm pathway, a guaranteed sales channel through state retail could actually reduce the marketing and real estate costs that make retail expansion so difficult in other states.

What Does This Mean for Social Equity in North Carolina’s Cannabis Market?

Cannabis social equity programs typically focus on giving people affected by prior criminalization ownership stakes in dispensaries, the most profitable link in the supply chain. North Carolina’s draft framework complicates that approach by removing retail ownership from the table entirely, at least for private businesses.

If the state ends up controlling every cannabis store in North Carolina, equity applicants would need to find opportunity elsewhere in the supply chain, most likely through the craft farm cultivation license or through processing and manufacturing licenses. That’s a meaningfully different equity model than what states like Illinois or California have pursued, where equity licensees often compete for retail licenses directly.

The council’s founding mandate does include addressing past cannabis convictions as part of its recommendations, and expunging simple THC possession charges is explicitly part of Governor Stein’s charge to the group. But how that mandate translates into actual business opportunity depends heavily on which Tier 2 wholesale model the state adopts and how accessible the craft farm license turns out to be in practice.

It’s also worth watching how many retail jobs a state-run system would create compared to a private dispensary market, and whether the state would structure those jobs as public sector positions, with different hiring and compensation standards than a typical cannabis retail job.

What Happens Next With North Carolina Cannabis Legalization?

None of this becomes reality without the General Assembly actually passing a cannabis legalization bill, and that remains far from certain. House Speaker Destin Hall has shown no appetite for legalization legislation, and the Senate has repeatedly passed medical marijuana bills that stalled in the House.

There are signs of movement, though. Senate President Pro Tem Phil Berger recently said lawmakers would take a more serious look at medical marijuana following the federal government’s move to reschedule cannabis. Polling cited in the council’s own reporting shows strong North Carolina support for legalizing medical marijuana, with a majority open to recreational legalization as well.

The Advisory Council on Cannabis must submit its final report and any proposed legislation to lawmakers by December 31, 2026. Before then, expect more subcommittee meetings, including additional Market and Regulatory Subcommittee sessions running through November, where members will likely refine, or possibly scrap — this retail framework altogether.

For now, treat the state-controlled retail model as exactly what NCDHHS labeled it: a discussion draft. It’s a real signal of where some influential voices in North Carolina’s cannabis policy conversation are looking, but it is not law, not a bill, and not guaranteed to survive contact with the General Assembly.

What Should the Cannabis Industry Be Watching From Here?

North Carolina’s draft framework raises a question most legal cannabis states never had to answer: what happens to an industry when the most valuable part of the business, retail, belongs exclusively to the government. Companies eyeing North Carolina should watch three things closely. First, which Tier 2 wholesale model survives the subcommittee process, since that determines how much control private distributors retain. Second, how the craft farm license gets defined, since that’s likely to be the most accessible entry point for smaller operators. Third, whether the General Assembly shows any real appetite for passing legalization legislation at all in 2027.

Cannabis businesses that have built strategies around owning retail should start scenario planning now for a market where that option may not exist in North Carolina. Growers and processors with strong wholesale relationships and craft-scale operations may find this model more approachable than the crowded, capital-intensive dispensary races playing out in other states.

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